Botswana’s finance minister announced plans to cut spending on new vehicles and travel for government officials, and may delay certain capital projects in response to a decline in diamond revenues, according to Blomberg.
“We have to seriously reduce the pace of spending, and we are looking at areas such as procurement of vehicles, computers, workshops and travel that is funded by government,” Finance Minister Peggy Serame told lawmakers on Monday.
Botswana’s economy and diamond dependence
This decline in sales is a major blow to the Southern African nation, which derives 30%-40% of its revenue, 75% of its foreign exchange earnings, and a third of its national output from sales of rough diamonds.
Botswana’s budget revenue for the first quarter of the fiscal year, beginning in April, fell short by about 28%, totalling only 23.4 billion pula ($1.7 billion), primarily due to lower diamond revenues and sales, according to Finance Minister Peggy Serame.
“If things do not improve, we will also have to look at delaying some projects that we had planned,” Serame stated.
As the world’s largest producer of rough diamonds by value, Botswana relies heavily on diamond revenues for its budget. However, global diamond sales have been hampered by an oversupply, weak demand from the crucial Chinese market, competition from lab-grown gems, and inflation-stricken consumers.
The budget pressures come at a critical time for Botswana, as the county gears up for elections in October, where President Mokgweetsi Masisi is seeking reelection.
The economic challenges could influence the political landscape as voters assess the government’s handling of the financial downturn.
